Well, you make me wonder if we've all missed something really big in this chapter. Why is Aule able to make Dwarves, even if they have no free will, and Melkor is not? Or to ask it another way, does Melkor have creations like the Dwarves? Aule "began to instruct the Dwarves in the speech that he had devised for them," so apparently they could talk. Iluvatar tells him they would move when he thinks to move them and be idle when his thought is elsewhere. Wouldn't Melkor have the same results?

Otherwise, one thing I'd say about repenting is that Aule does it immediately and without encouragement. He was keeping his creation secret from the blame of other Valar, so he knew it wasn't quite right, but he was willing to sacrifice the Dwarves to his father/god to make amends, though Eru stopped the killing at the last instant with a blessing. This reminds me of the story of Abraham, who is told that to prove his love to God, he has to sacrifice his son, and he obeys, but God says at the last minute to stop, so Abraham has proven his obedience to God and gets to keep his son, so everyone is happy, except the ram that gets sacrificed instead. (The Hebrew Bible says the son was Isaac; the Koran says Ishmael; both have a sheep getting killed in place of the son.) Not that Abraham was creating anything, but the parallels of obedience, father/son, and last-minute life-saving are there.

Thinking about frightful evil coming from a good root has Silmarils written all over it--that was an act of creation gone wrong.

I keep laughing out loud when I read this!

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Perhaps it's a good thing that only 3 of the Valar know about this, or we'd end up with a veritable Narnia of talking creatures.